ASADA v 34 Players and One Support Person (No 2)
[2015] VSC 14
•30 January 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
ARBITRATION LIST
S CI 2014 06387
| CHIEF EXECUTIVE OF THE AUSTRALIAN SPORTS ANTI-DOPING AUTHORITY AUSTRALIAN FOOTBALL LEAGUE (ACN 004 155 211) | Applicants |
| v | |
| 34 PLAYERS AND ONE SUPPORT PERSON | Respondents |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 12 December 2014, 17 and 22 December 2014 (Written Submissions) and 30 January 2015 |
DATE OF JUDGMENT: | 30 January 2015 |
CASE MAY BE CITED AS: | ASADA v 34 PLAYERS AND ONE SUPPORT PERSON |
MEDIUM NEUTRAL CITATION: | [2015] VSC 14 |
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COSTS – Application for leave to issue subpoena under Commercial Arbitration Act 2011 – Whether applicant should pay the costs of leave hearing – Basis upon which costs so ordered should be calculated – Supreme Court (General Civil Procedure) Rules 2005, O 42.11 – Supreme Court (Chapter II Arbitration Amendment) Rules 2014, r 9.14(8).
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APPEARANCES: | Counsel | Solicitors |
| For the CEO of ASADA | Mr D. Starr with Mr T. Goodwin | Australian Government Solicitor |
| For the AFL | Ms R. Enbom | Counsel for the AFL |
| For 32 of the 34 Players | Mr D. Grace QC with Mr B. Ihle | Tony Hargraves |
| For 2 of the 34 Players | Mr S. Norton | Story & Associates |
| For Mr N. Alavi-Moghadam | Mr A. Rodbard-Bean with Mr B. Mason | Marsh & Maher |
HIS HONOUR:
Background
This is an application by Mr Nima Alavi-Moghadam (“Alavi”) for a special costs order whereby the Applicants, the Chief Executive Officer of the Australian Sports Anti-Doping Authority (“ASADA”) and the Australian Football League (“AFL”) pay, on an indemnity basis, Alavi’s costs of their application for orders for the issue of subpoenas, requiring Mr Shane Charter (“Charter”) and Alavi to attend for examination before the AFL Anti-Doping Tribunal during a hearing which was due to commence on 18 December 2014.
The application by ASADA and the AFL for the issue of subpoenas was sought by them pursuant to the provisions of s 27A of the Commercial Arbitration Act 2011 (“the Act”) and pursuant to r 9.14 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008, as amended by the Supreme Court (Chapter II Arbitration Amendment) Rules 2014 (“the Arbitration Rules”). On 12 December 2014, I made orders dismissing the application by ASADA and the AFL, for reasons which I delivered on 19 December 2014 (“the reasons”). [1] These orders of 12 December 2014 also made provision that the Applicants pay the costs of the First Respondent, the 34 Players, on a standard basis, and reserved the question of whether Alavi should have the benefit of a special costs order.
[1]ASADA v 34 Players and One Support Person [2014] VSC 635.
The Arbitration Rules do not make special provision with respect to the costs of an application for the issue of a subpoena under those Rules but, rather, rely upon the operation of O 42 of the Supreme Court (General Civil Procedure) Rules 2005 (“the General Rules”). This is achieved by r 9.14(8) of the Arbitration Rules, which provides that: “Order 42 of the Chapter I applies so far as it is practicable to a subpoena referred to in this Rule”. Consequently, it is necessary to look to the provisions of r 42.11 of the General Rules which provides as follows:
42.11 Costs and expenses of compliance
(1)The Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena.
(2)If an order is made under paragraph (1), the Court shall fix the amount or direct that it be fixed in accordance with the Court's usual procedure in relation to costs.
(3)An amount fixed under this Rule is separate from and in addition to—
(a) any conduct money paid to the addressee;
(b)any witness expenses payable to the addressee.
Rules of this nature were considered by Byrne J in Pyramid Building Society (in liq) v Farrow Finance Corporation (in liq); ex parte Farrow, Clarke and Lawson (“Pyramid Building Society v Farrow Finance Corporation”).[2] At the time that case was decided, the rule was in the following terms:
42.08(1)Where a person named not being a party reasonably incurs in complying with a subpoena expense or loss substantially exceeding the amount of any conduct money given, the Court may order that the party who filed the subpoena pay to that person an amount in respect of that expense or loss.
Further attention is given to this decision in the reasons which follow.
[2][1995] 1 VR 464.
It goes without saying, but should be emphasised in the present context, that the failure to comply with a subpoena is a most serious matter. Rule 42.12(1) of the General Rules provides that:
Failure to comply with a subpoena without lawful excuse is a contempt of court and the addressee may be dealt with accordingly.
Submissions
The principal submission of Alavi is that he should not be out of pocket through litigation in which he has no interest. Thus, it is submitted, costs should be awarded in his favour on an “indemnity basis” in order to achieve this position. In making this submission, Alavi says, specifically, that this is not an adverse reflection on the merits of the application by ASADA and the AFL to subpoena him, but is, rather, in recognition that Alavi has no direct interest in the issues for determination before the AFL Anti-Doping Tribunal. Alavi advances three reasons in support of the application for an “indemnity” costs order in the present circumstances. It is to these particular matters that I now turn.
First, it is contended that whilst Alavi is not a party to the AFL Anti-Doping Tribunal proceedings, his involvement in the subpoena application was, in essence, as the sole contradictor to submissions put on behalf of ASADA and the AFL. He says that given the neutral position adopted by the Respondents, Alavi’s submissions materially assisted the Court in identifying and refining the issues for ultimate determination. Moreover, it is said that this was particularly the case in relation to the question whether the AFL Anti-Doping Tribunal proceedings could properly be characterised as “arbitration” proceedings or “commercial” arbitration proceedings to which the Act applied, or whether the process provided for under the Australian Sports Anti-Doping Authority Act 2006 (Cth) would attract the operation of the provisions of s 1(6) of the Act and, consequently, enliven jurisdiction to the issue of the subpoenas sought under s 27A of that Act.
It is also contended that an “indemnity” costs order in favour of Alavi would be consistent with the decision of Hollingworth J in Clough Engineering Limited v Origin Energy Resources Limited.[3] The plaintiff in that case sought leave to issue subpoenas under ss 17 and 47 of the Commercial Arbitration Act 1984. During the course of argument in that case, the parties to the arbitration and one of the proposed subpoenaed parties agreed the scope of the subpoena to be issued. This left, as the outstanding matter for the court’s determination, the question how the costs of the plaintiff’s summons was to be borne. It was noted by Hollingworth J that the proposed subpoenaed party had been of considerable assistance to the court in identifying and refining the issues, and the fact that he was a “non-party to the arbitration” with no pecuniary interest in its outcome also made it “appropriate that he be awarded his costs on a higher than usual scale”.[4] For these reasons, the subpoenaed party was awarded costs on a solicitor-client basis.[5]
[3][2006] VSC 349.
[4][2006] VSC 349 at [8].
[5][2006] VSC 349 at [8].
Secondly, Alavi submits that this case is analogous to those where a subpoena is set aside under r 42.04 of the General Rules and similar costs consequences should follow. In this respect, reference is made to the decision of Gyles J in Kennedy v Wallace[6] in relation to the equivalent rule in the Federal Court that “there is no reason why a third party [who successfully applies to have a subpoena set aside] should be out of pocket through becoming involved in this way in another piece of litigation with no possible advantage to him”.[7] This is particularly the case where it is reasonable for that person to “take all available steps to protect his position”.[8] On this basis, Gyles J ordered that the third party be paid on a solicitor-client basis. Alavi contends that the facts in Kennedy v Wallace are comparable to this case in that both proceedings involved non-parties incurring costs when ensuring that the coercive powers of the court to issue subpoenas were properly exercised. It is said that just as the costs of the third party in Kennedy v Wallace were paid at higher than the usual scale, that is on a solicitor-client basis, rather than on the usual lower party-party basis, so, too, should Alavi’s costs of this proceeding.
[6][2004] 136 FCR 114.
[7][2004] 136 FCR 114, at [28].
[8][2004] 136 FCR 114, at [28].
Thirdly, it is said by Alavi that this case is also analogous to those where a person is permitted to recover the reasonable loss or expense they incur in complying with a subpoena under r 42.11 of the General Rules. By way of example, reference is made to the decision of Byrne J in Pyramid Building Society v Farrow Finance Corporation. Costs incurred by three directors in obtaining legal advice and representation on a question of privilege was allowed where the directors had been subpoenaed to give evidence. The costs awarded to the directors in this case reflected the expenses the directors actually and reasonably incurred when complying with the subpoenas, to the extent that it was not reimbursed as conduct money. In the course of the judgment, Byrne J noted that:
… The intent of the rule is to cast upon the party responsible at least part of the burden which the service of a subpoena has imposed upon the person who has no direct interest in the litigation. Such an objective is not to be achieved by giving to the words of the rule an unnecessarily strict construction.
The relevant rule was r 42.08 of the then General Rules, the provisions of which have been set out previously. On the basis of the decision in Pyramid Building Society v Farrow Finance Corporation, Alavi contends that, by analogy, it is appropriate for a subpoenaed non-party to recover their actual and reasonably incurred costs when complying with a subpoena and the costs they incur obtaining legal advice in relation to it. Thus, it is said, a person who successfully challenges an application for a subpoena under s 27A of the Act should also recover the comparable costs they incur in obtaining advice in relation to that application and in appearing before the Court in relation to that application. Moreover, it is said that this may be accomplished in the present circumstances by an “indemnity” costs order. In this respect, it should be noted that Alavi observes in his submissions that this is a position not dissimilar in effect to the position achieved by the present r 63.30.1 of the General Rules, which provides:
63.30.1Indemnity basis
(1)Subject to paragraph (2), on a taxation on an indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.
(2)Any doubt which the Costs Court may have as to whether the costs were unreasonably incurred or were unreasonable in amount shall be resolved in favour of the party to whom the costs are payable.
For the reasons which follow, I am of the opinion that paragraph (2) of the rule just set out is particularly pertinent in present circumstances.
ASADA and the AFL do not oppose the award of costs to Alavi, but say that his entitlement is limited to a costs order on the “standard basis”.[9] Reference to this basis of awarding costs is a reference to r 63.30 of the General Rules, which is in the following terms:
[9]By email dated 22 December 2014 sent to the Court by the solicitors for the AFL, the AFL adopted ASADA’s Submissions on Costs (22 December 2014). Accordingly, in the submissions which follow, it should be taken that submissions on behalf of ASADA are to be taken to be submissions on behalf of both ASADA and the AFL.
63.30 Standard basis
On a taxation on a standard basis, all costs reasonably incurred and of reasonable amount shall be allowed.
More particularly, ASADA submits that Alavi’s application for costs on an indemnity basis should be rejected and that the authorities relied upon by Alavi indicate that he should only receive his costs on a “standard/solicitor-client basis”. I turn now to ASADA’s submissions with respect to those authorities.
In relation to Clough Engineering Limited v Origin Energy Resources Limited,[10] ASADA emphasises that Hollingworth J made an order that the addressee of the subpoena receive his costs on a solicitor-client basis. At the time of decision, the definition of “solicitor-client” was, it is submitted, in effect identical to what is now provided for under the General Rules as the “standard basis”.[11] Accordingly, it is contended by ASADA that if the Court chooses to follow Clough, costs should only be awarded to Alavi on the standard basis; a basis of taxation which would ensure that Alavi was “not out of pocket”[12] in the general sense of the term. Moreover, it is contended that if Clough stands for the proposition that the addressee of a subpoena should receive “higher than usual”[13] costs, it is distinguishable on its facts. ASADA says that in that case, the subpoenas as originally drawn were “very broad and far-ranging” and that it was only then intervention of the defendant and the addressee that “reduced [the subpoena] to something which is far more manageable”.[14] If required to comply with the original subpoenas, the addressee would have faced an enormous task in dealing with over 50,000 pages of documents.[15] The addressee assisted the Court in that respect in identifying and refining the issues. ASADA says that in the present case, there was no suggestion that the subpoenas sought to be issued were improperly drawn or unworkable[16] and that in any event, the relevant issues were identified by ASADA in its written submissions, namely whether proceedings before the AFL Anti-Doping Tribunal were properly characterised as “arbitration” proceedings and whether, if they were arbitration proceedings, they were of a “commercial” nature and whether s 1(6) of the Act was invoked. ASADA does concede, nevertheless, that even if the facts in Clough are distinguishable from those in the present case, the question of costs is “a highly discretionary matter”.
[10][2006] VSC 349.
[11]In this respect, ASADA submits (Submissions of the First Applicant on Costs (22 December 2014):
5.Relevantly, o 63 of the General Rules was amended on 1 April 2013. Prior to that date, costs could be awarded on a party-party, solicitor-client or indemnity basis, or some other basis directed by the Court. However from 1 April 2013, party-party costs were abolished and, except as otherwise provided or ordered, costs are to be taxed on standard basis (defined as ‘all costs reasonably incurred and of reasonable amount’): Rules 63.30-63.31. Thus, under the current rules, costs shall be taxed on the standard basis (unless otherwise provided or ordered) and the standard basis for taxation correlates with the former solicitor-client basis for taxation. [Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd & Ors (No 9) [2014] VSC 622 at [14] per Dixon J.
[12]Referring also to Kennedy v Wallace [2004] 136 FCR 114, at [28].
[13][2006] VSC 349, at [8].
[14][2006] VSC 349, at [7].
[15][2006] VSC 349, at [7].
[16]Referring to ASADA v 34 Players and One Support Person [2014] VSC 635 at [62]-[65].
ASADA also submits that the decision in Kennedy v Wallace[17] does not support Alavi’s position. ASADA says that the Federal Court found in that case that the service of the subpoena was “clearly inappropriate” and was potentially done for ulterior motives.[18] On this basis, Gyles J found that the service of the subpoenas was “flawed and a misuse of the power to do so”.[19] Moreover, ASADA emphasises that even in those circumstances, the court refused to order indemnity costs, the court, instead, deciding the costs should be taxed on a solicitor-client basis. In this respect, reference is made by ASADA to the following parts of the judgment of Gyles J, which it is helpful to set out in full:[20]
27.ASIC must pay Rivkin’s costs of the motion. I do not agree that the former O 27 r 4A was the only, or the appropriate, source for an order of costs in this instance. However, a case for indemnity costs has not been established. If I had concluded that the exercise was designed by ASIC to apply pressure upon either or both of Rivkin or Kennedy rather than for a perceived appropriate forensic purpose, I would have required no persuasion to make such an order. I am not prepared to make that finding. The decision to serve the subpoenae might be seen as hasty and perhaps ill-considered but is quite explicable in the context of preparation of a case of considerable evidentiary complexity that was being dealt with with expedition. It was also argued that service of the subpoenae in the face of the correspondence from Rivkin’s solicitors was itself a proper basis upon which to make an order for indemnity costs. I do not agree. The correspondence was primarily directed to other issues and was not in any sense a barrier to service of a subpoena at a time when that was appropriate. I further take note of the fact that the setting aside of the subpoenae by consent limited the adverse practical effect upon Rivkin of the service of them upon him.
28.I am thus not prepared to order indemnity costs on the basis of fault on the part of ASIC. On the other hand, there is no reason why a third party should be out of pocket through becoming involved in this way in another piece of litigation with no possible advantage to him, particularly where he was a target of ASIC at the time. It was reasonable that he take all available steps to protect his position. ASIC will be ordered to pay the taxed costs of Rivkin on this motion on a solicitor/client basis. Such costs should be taxed and paid forthwith.
On this basis, ASADA contends that the facts calling for indemnity costs in Kennedy were far stronger and more serious than those in the present case. Moreover, it is observed that Alavi accepts that his application for indemnity costs is “not an adverse reflection on the merits of ASADA and the AFL’s application”.[21]
[17][2004] 136 FCR 114.
[18][2004] 136 FCR 114, at [24]-[25].
[19][2004] 136 FCR 114, at [26].
[20][2004] 136 FCR 114, at [27]-[28].
[21]Mr Alavi’s Submissions on Costs (17 December 2014), at [2].
ASADA also submits that Pyramid Building Society v Farrow Finance Corporation is more appropriately seen as authority for the making of a costs order on a standard basis, Byrne J having rejected the claim by the addressee for indemnity costs. In this respect, reference is made to the following passage where Byrne J said:[22]
This is not to say that a witness is entitled to be indemnified against all expenses incurred. They must be reasonably incurred and they must substantially exceed the conduct money given. [emphasis added by ASADA]
[22][1995] 1 VR 464 at 469.
ASADA submits that this more closely accords with the current definition of costs on the standard basis. I also observed that in Pyramid, the costs recoverable were limited to obtaining advice and representation on the issue of privilege alone “which fell outside the normal advice and assistance [of complying with a subpoena] for which no recompense is allowed”.[23] Reference to this passage is, presumably, to indicate and emphasise that the order for costs in that case was something less than “indemnity” costs. However, in the context of that case, I take Byrne J to be excluding costs not sufficiently related to the species of costs which were recoverable with respect to the subpoena, rather than going to the basis upon which these costs would be ordered.
[23][1995] 1 VR 464 at 470.
Finally, ASADA submits that no special circumstances exist which would warrant the award of “indemnity” costs, a submission which refers back to the submissions made with respect to the principles on which costs are awarded to non-parties, particularly the proposition that the Court, in exercising its broad discretion as to costs, should only make costs orders in favour of and against a non-party in exceptional circumstances and with caution.[24] In this respect, it is submitted that there was no suggestion of impropriety, unreasonableness or abuse of process on the part of ASADA or the AFL. It is contended that in those circumstances, the Court should reject awarding costs to Alavi, notwithstanding his position as a non-party, on an indemnity basis.[25]
[24]See Submissions of the First Applicant on Costs (22 December 2014), [3]; and see also [6], as follows:
The CEO submits that the prima facie position is that if exceptional circumstances warrant the award of costs to a non-party, it should be done on the standard basis. Only if further special circumstances exist should indemnity costs be ordered, in accordance with settled principles. [cf Naomi Marble and Granite Pty Ltd v FAI General Insurance Company Ltd (No 2) [1999] 1 Qd R 518 at 544 per Shepherdson J].
[25]Referring to Re Pan Pharmaceuticals Ltd [2004] 48 ACSR 681 at [20] (Barrett J).
Application of the current rules and authorities
In my view, the general proposition which is established clearly in the authorities to which reference has been made in both the Alavi and ASADA submissions is that in the context of the then costs rules, the position adopted by the courts was that where an addressee of a subpoena had incurred costs and expenses not covered by the conduct money provisions (flowing directly as a result of the issue of or application for a subpoena), then that person was entitled to have those costs and expenses met by the party issuing or seeking the subpoena. The cases also indicate, in this respect, that to the extent that costs within the contemplation of the rules were to be met, those costs were to be calculated on a higher basis than on the ordinary inter partes, party-party costs basis. Consequently, costs were awarded on a solicitor-client basis.
Reference has already been made to the decision of Byrne J in Pyramid Building Society v Farrow Finance Corporation in the context of r 42.08 as it appeared in the General Rules in 1994. For present purposes, it is helpful to set out the following part of his Honour’s judgment in that case:[26]
I turn now to the second submission put on behalf of the building societies, that based on discretion. In considering this submission, with respect to a subpoena to give evidence. I am in relatively uncharted waters. Cases where orders have been made have all been concerned with subpoenas to produce documents. The common law position is that, subject to the cost of travel and sustenance, the citizen must bear the cost of complying with the court order. The role of the rule is to mitigate in the appropriate case the hardship of compliance which may be imposed on a person who is not concerned in the proceeding as a party.
In the insolvency jurisdiction the practice has long existed that a person summoned to be examined under legislation which admits the payment of witnesses’ costs is not entitled to award of costs where he or she is “a mere witness”, as opposed to a witness against whom legal proceedings are either in existence or have been determined upon: Ex parte Waddell; In re Lutscher (1877) 6 Ch D 328 (at 331) per Cotton LJ; Re Auto Import Co (Australia) Ltd (1925) 25 SR (NSW) 587; Re Anderson; Ex parte Official Receiver (1937) 10 ABC 284; Re Spedley Securities Ltd (In liq); Ex parte Australian National Industries Ltd (1991) 4 ACSR 322, SC (NSW). In the case of a mere witness the non-entitlement to costs is said to flow from the fact that such a person is the equivalent of a witness called in any litigation: Ex parte Waddell; In re Lutscher (at 332). These cases are of limited value for present purposes because of the terminology in the statutes which focuses upon “costs” rather than “expenses”. The view taken is that legal costs of representation should be dealt with as “costs” rather than as “expenses”. See In re Appleton, French and Scrafton Ltd [1905] 1 Ch 749; Re Kusmenko; Golovachenko v Official Receiver (1976) 28 FLR 183. Nevertheless, there appears in the judgments an underlying resistance to the award of compensation for legal expenses except where the relationship between the party calling the witness and the witness is an adversarial one or it is otherwise just that an order be made: Re Equiticorp Finance Ltd; Ex parte Brock (No 2) (1992) 27 NSWLR 391 (at 394) per Young J. It may be said by analogy that a non-party witness stands in this relationship so that the court should approach an application under r 42.08 with a similar antipathetic disposition.
In my view, it would not be correct to do so. The rule confers a new right in general terms. In a case such as the present where the witnesses have been charged with serious offences arising out of the very subject matter of the litigation, it was proper that their interests be protected by representation. Furthermore, the court itself has derived benefit from the presence of counsel for the witnesses in producing material and explaining the nature of the apprehended risk to their clients. In these circumstances it is reasonable that the cost is properly treated as a cost to the party filing the subpoenas of bringing the witness to court to give evidence. That party, after all, might have decided not to press for compliance with the subpoena when the claim for privilege had been brought to its attention. This is not to say that a witness is entitled to be indemnified against all expenses incurred. They must be reasonably incurred and they must substantially exceed the conduct money given. In the ordinary course, non-party witnesses would not require advice as to their general rights and responsibilities in answering the subpoena, or legal assistance in communicating with the solicitors for the party filing the subpoena as to the time, place and manner of attendance. If such advice and assistance was sought in the ordinary case, its cost would not be recoverable under the rule. The normal consequence of the receipt of the court order should be borne by the witness as a burden of citizenship. Such costs, in any event, would not normally substantially exceed the conduct money given to the witness.
The witnesses before me sought payment of their legal expenses to be taxed on a solicitor and client basis. On behalf of the building societies this submission was resisted as being an inappropriate measure for a witness who is not a party to the litigation, but it was conceded that the order should be for actual costs reasonably incurred. I am content to adopt this course.
As observed by ASADA, it is clear from this passage that Byrne J eschewed entitlement to indemnity costs, that is “indemnification of all expenses”, but it is clear from both this judgment and the other authorities to which reference has been made that the authorities support the position that the addressee of a subpoena is entitled to all costs and expenses reasonably incurred.[27]
[26][1995] 1 VR 464 at 468-469.
[27]And which have sufficient proximity in that they relate directly to the issue of or application for issue of the subpoena. In this respect, reference has already been made to the judgment of Byrne J in Pyramid at [1995] 1 VR 464.
As indicated previously, the General Rules have been amended since 1994 and relevantly now require reference to r 9.14(8) of the Arbitration Rules and rr 42.11 and 63.30 and 63.30.1 of the General Rules. The critical rules in the present context are, of course r 42.11 and these parts of r 63. In the present context, the provisions of r 63 are being applied outside the usual inter partes costs environment as the addressee of the subpoena is not a party. The application of the inter partes costs rules in r 63 is, however, as a result of the operation of r 42.11(2) and are, in a sense, rules which, in this context, simply provide the machinery for the operation of r 42.11 according to its own terms. Nevertheless, it is relevant to consider some aspects of the learning and operation of rr 63.30 and 63.30.1. However, it does not follow, in my view, that the learning in the authorities with respect to the circumstances in which “indemnity” costs might be awarded under the provisions of now r 63.30.1 necessarily apply in the present circumstances. Rather, the proper question is, how are the provisions of r 42.11 to be applied having regard to the authorities to which reference has been made; authorities which indicate that where a person seeks to invoke the coercive powers of the court with respect to subpoenas, a person who seeks to resist that process or to comply with the process is entitled to have costs and expenses reimbursed so that they are not out of pocket as a result. As the authorities indicate, this is particularly so in circumstances where they have no interest in the relevant proceedings and, in any event, seek to assist the court with respect to the issue of or compliance with the subpoena. As is clear from the reasons, Alavi was of considerable assistance to the Court with respect to the issues raised in the application for issue of the subpoenas.
Further light is helpfully cast on the present issue in the commentary on the rules in Civil Procedure Victoria:[28]
The previous solicitor and client basis of taxation of the costs payable by a party afforded a more generous recovery of costs than costs on the previous basis of party and party. However, solicitor and client costs did not provide a complete indemnity. Such complete indemnity would be given only if costs were awarded on an indemnity basis. Rule 63.28(c), introduced by Supreme Court (Chapter I Amendment No 18) Rules 2001 (Vic) SR 111 of 2001, provides that the court may award indemnity costs. Although the expression “indemnity costs” is not fully elucidated in the rules it appears to enable the court to allow any costs to allow the party an indemnity against all legal costs so long as the items claimed have not been unreasonably incurred or are not of an unreasonable amount, r 63.30.1(1).
…
In the case of solicitor and client costs, r 63.32 (now repealed) gave instances of when costs on that basis may be allowed, namely, upon payment to a party of costs out of a fund, or to a party who sues or issued as trustee. (Those instances have now been revoked). However, as r 63.32(2) made clear, that did not limit the power of the court to allow the recovery of solicitor and client costs in other circumstances. See Regal Life Insurance Ltd v Pacific Financial Resources Pty Ltd (VSC, Batt J, No 2145/92, 16 November 1994, unreported, BC9401301); Bass Coast Shire Council v King [1997] 2 VR 5 at 29; (1996) 92 LGERA 129. In contrast, r 63.30.1, which provided for indemnity costs, does not specify any circumstances in which costs on that basis may be awarded. The current rules do not specify the circumstances in which indemnity costs may be allowed or the items to be allowed on that basis. Standard costs are awarded in respect of all costs reasonably incurred and of reasonable amount, r 63.30. Indemnity costs are presumably to afford a complete indemnity since r 63.30.1 refers to all costs being allowed save for such as are unreasonably incurred or are of unreasonable amount. When the two rules are compared it is difficult to see whether the difference between r 63.30 and 63.30.1(1) in using positive as against negative reference to reasonableness of incurrence or amount of costs is a distinction without a real difference. Perhaps the distinction lies in the onus of establishing the reasonableness of the incurring of the costs of their amount which shifts against the opposite party in relation to indemnity costs, but see r 63.30.1(2). The distinction will no doubt be revealed by judicial elucidation in due course.
In my view, this commentary accurately and clearly highlights the position that the principal difference in effect now between an order for costs under r 63.30 and an order for costs under r 63.30.1 lies in the onus of establishing the reasonableness of incurring of the costs and that this does shift against the opposite party in relation to “indemnity” costs.
[28]Williams, Civil Procedure Victoria (Lexis Nexis, loose leaf), [I 63.02.180].
It follows from these considerations, in my view, that it is not appropriate to cast the onus on the addressee of a subpoena to establish the reasonableness of costs and expenses incurred but, rather, this should be the burden borne by the party issuing or seeking to issue the subpoena.
Conclusions and orders
For the preceding reasons, I am of the opinion that Alavi is entitled to costs and expenses under r 42.11 of the General Rules calculated on the basis provided for under r 63.30.1 (Indemnity basis). In all the circumstances, particularly having regard to the position that this application arises directly out of the proceedings with respect to the principal Application, I am of the opinion that the costs of this application should be treated as part of the costs and expenses incurred by Alavi as addressee of the proposed subpoenas.
Orders are to be brought in to give effect to these reasons.
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